Logistics Market Report 2017

Greater Area Colliers international Logistic Market report 2017

The current market situation is that the appetite The vacancy rate within this market has fallen Summary from both domestic and foreign investors further and is currently just above 8 %. The regarding this sector is huge. The transaction decrease of approximately 2 percentage points volume thus far this year, also suggests that it will is significant and not surprising. A considerable surpass the strong years of 2014, 2015 and 2016 amount of old obsolete stock is removed from the in terms of both volume and share of transaction market, either for conversion or it is not actively total. The attractiveness of the logistics market is marketed any longer. While the vacancy rates This is the third annual Logistics report provided by boosted by long leases and single tenants which has decreased, it is important to note that there Colliers International on the Greater Oslo logistics is both highly desirable amongst most investors are several possible new developments currently in this day in age. Our projection is however that being actively marketed which is not included in market. In that timeframe, we have seen the prime the yield has slowly started to bottom out and the vacancy rate. yield for the logistics sector drop from 6 % to 5 %, we do not foresee such a sharp decrease in the yield level for our 2018 report. A 5 % yield in the Aleksander Gukild significantly more compared to both the office and logistics market is also quite the barrier and we Head of Research retail sectors´ yield development in the same time remain hesitant to suggest that this barrier will MOB +47 92 61 53 38 be broken for the duration of 2017. [email protected] period. 2 For 2017 as a whole, we do expect a transaction volume for the logistics sector of close to NOK 10 bn which would be a record high. This does however hinge on a variety of factors, where the most important one would be willing sellers. Investors are undoubtedly eager and waiting for prospective possibilities. At present, the accumulated volume of 2017 if around NOK 5 bn for the logistics sector.

The rents however has been stagnant for quite some time and 2017 is no different. The prime rent which is found in Groruddalen, remains at NOK 1 250,- per sqm. There is some upwards potential and it is a possibility that the prime rent will increase beyond NOK 1 300,- per sqm going forward. However, we have currently not seen enough evidence to alter our stance compared to last year. Colliers international Logistic Market report 2017

Macro economy

The Norwegian economy is recovering from the effects GDP Mainland CPI % %

of the oil downturn and the scarce growth in global 3 4 rent rent demand. The Norwegian economy continues to be 3 heavily reliant on the petroleum business and the 2 “­­oil-fund” continues to support a growing portion of 2

1 the Norwegian GDP. The economical downturn has now 1 lasted for nearly three years. However, it is becoming 3 0 0 increasingly apparent that the tide has turned and that 2013 2014 2015 2016 2017 (e`) 2018 (e`) 2019 (e`) 2020 (e`) 2013 2014 2015 2016 2017 (e`) 2018 (e`) 2019 (e`) 2020 (e`) Source: Statistics Source: Statistics Norway Norway is set up for strong economic growth going forward. This view is supported by most experts in

the field. Unemployment

%

5 rent

The Norwegian GDP growth was 0,9 % in 2016 Currency 4 according to Statistics Norway. This figure is The Norwegian NOK has in general been 3 however expected to increase closer to 1.8 % in somewhat strengthened by the improving oil price

2017 and further on towards 2,4 % in 2018 and and macro conditions. At year end, the NOK was 2 draws a very positive image for the Norwegian trading at roughly 9 against the € Euro and even economy. Other sources and experts are below, which was for the first time in roughly 18 1 frequently suggesting even higher growth in the months. However, the NOK has decreased as of 0 coming years. This underpins the perception that late (mid April) and is currently trading at levels 2013 2014 2015 2016 2017 (e`) 2018 (e`) 2019 (e`) 2020 (e`) the Norwegian Economy is likely to pick up the around NOK 9.15 per 1 € Euro. Furthermore, al Source: Statistics Norway pace and that there are exiting times ahead. though not at peak levels, the NOK is currently Colliers international Logistic Market report 2017

very weak compared with the USD $ when the petroleum sector as it is expected that the reviewing it in a historical perspective which investment will bottom out in 2017. Also, the is in part fueled by the Americans increasing cost of developing an oilfield has sunk by 40 % their interest rates twice within a relatively compared to 2014. Also, mainland Norway is short period of time as well as “Trumpism”, in projected to perform quite well in the year of addition to a generally weak NOK. Before the 2017 in terms of investment and also a slight recent fall of the NOK in the past month, an increase in exports. The unemployment rate is increase was widely expected. However, the last expected to stay at the current level during the months decrease has made the road ahead more course of 2017 and further down into 2018 and uncertain. Our main scenario remains that the 2019. NOK will increase against most other currency going forward in 2017 and especially in 2018. Oil Price The oil price increased quite considerably towards CPI the end of 2016 and has since remained between CPI continuously surprised on the “upside” in $ 50 and $ 60 per barrel. At the time being (early 2016 and the end level forecasted was suggested September) the oil price is hovering around $ 55, to be the highest number for several years. The after a recent increase after the summer. After 4 CPI levels for 2016 ended up at 3.6 % – well OPEC and other major oil producing countries has beyond comparable data for other Western engaged in several agreements as of late, the oil European countries as well as way above price is according to most experts within the field, estimates from the start of the year. Going likely to continue to increase throughout 2017 and forward however, the expectation is that the beyond. annual increase will go back to levels close to the inflationary goal of the Bank of Norway which is 2.5 % in the next few years. The ­­CPI-ATE for 2016 ended up at 3 %, a figure which is expected to decrease significantly in 2017. As of September 2017, the CPI level is 1.5 %.

Unemployment The unemployment rate is as of the start of September 4,3 % which is a steady decline since the turn of the year. The overall trend is that the unemployment rate will continue to decrease going forward, although at a rather slow pace. This is due to factors such as a recovery in within Colliers international Logistic Market report 2017

Makro Indicator Export

%

6 Makro Indicator 2013 2014 2015 2016 2017 (e`) 2018 (e`) 2019 (e`) 2020 (e`)

5 GDP, Mainland 2,3 % 2,20 % 1,10 % 1,00 % 2,00 % 2,00 % 2,40 % 2,40 %

GDP 1,00 % 1,90 % 1,60 % 1,10 % 1,80 % 1,80 % 2,20 % 2,30 % 4

CPI (JAE) 1,60 % 2,40 % 2,70 % 3,00 % 1,60 % 1,70 % 1,60 % 1,60 % 3

Household Consumption 2,70 % 1,90 % 2,10 % 1,50 % 2,40 % 2,40 % 2,90 % 2,80 % 2

Public Consumption 1,00 % 2,70 % 2,10 % 2,10 % 1,90 % 1,70 % 1,80 % 2,20 % 1 Investments, Oil & Gas 19,3 % -3,20 % -15,00 % -16,90 % -0,30 % 0,20 % 8,20 % 3,00 %

0 Export -1,70 % 3,10 % 3,70 % -1,80 % 1,60 % 1,60 % 2,60 % 2,50 % 2013 2014 2015 2016 2017 (e`) 2018 (e`) 2019 (e`) 2020 (e`)

Export, Oil & Gas -5,50 % 1,90 % 3,2 % 4,30 % 1,40 % -0,40 % 1,00 % 2,30 %

Export Traditional Goods 1,30 % 3,1 % 5,80 % -8,20 % 2,00 % 5,00 % 3,30 % 2,60 % 5

Import 4,90 % 2,40 % 1,60 % 2,30 % 4,90 % 2,00 % 2,70 % 2,70 %

Import Traditional Goods 2,30 % 2,10 % 1,90 % -0,40 % 5,50 % 3,10 % 3,90 % 3,80 %

Unemployment 3,50 % 3,50 % 4,40 % 4,70 % 4,20 % 4,10 % 4,00 % 3,90 % Import GDP Mainland Employment (level) 71,2 71 71,2 70,7 70 70,2 70,4 70,6

Household Disposable Income 3,80 % 2,70 % 5,20 % -1,60 % 2,20 % 2,90 % 2,80 % 2,80 % % % 6 6 Household Savings Rate 7,60 % 8,20 % 10,40 % 6,90 % 6,50 % 6,90 % 6,90 % 7,30 %

5 5 Money Market Rate (level) 1,8 1,70 % 1,30 % 1 % 0,90 % 0,80 % 0,80 % 1,20 %

Consumer Price Euro-area 1,30 % 0,40 % 0,10 % 0,30 % 1,60 % 1,40 % 1,70 % 1,90 % 4 4

Salary 3,90 % 3,10 % 2,80 % 1,70 % 2,40 % 3,00 % 3,20 % 4,00 % 3 3

Residential Prices 4,00 % 2,70 % 6,10 % 7,00 % 5,00 % -4,80 % -1,20 % 1,20 % 2 2

CPI 2,10 % 2,00 % 2,10 % 3,60 % 2,10 % 1,90 % 1,70 % 1,90 % 1 1

0 0 2013 2014 2015 2016 2017 (e`) 2018 (e`) 2019 (e`) 2020 (e`) 2013 2014 2015 2016 2017 (e`) 2018 (e`) 2019 (e`) 2020 (e`) Source: Statistics Norway Colliers international Logistic Market report 2017

one of the buildings may provide a very high Areas Overview and vacancy rate, only to decrease drastically For the purpose of this report, we have included when the specific letting situation is resolved. 12 different logistics areas within the Greater Oslo definitions Furthermore, most of the areas with very area as was also the case in 2016. These are all low vacancy rates are of newer development located no more than an hours drive and less than where the majority of the buildings are 70 km from the Oslo city centre. Varying in size, occupied by larger single tenants which these are nonetheless the major logistics hubs in naturally ensure lower vacancy rates. Norway, in addition to some larger developments in in the west of Norway. The latter will The counted stock of logistics property is a result of a thorough The current vacancy rate for the logistics sector not be covered in this report. in the Greater Oslo area as a whole is currently ~ count of logistics developments in the . 10 %. This is a decrease of 2 percentage points The areas that will be featured in this report are compared to our 2016 report. We see that most the following: areas are quite volatile which is due to the size of each area which causes problems while looking • Groruddalen at historical vacancy statistics for each area. We • Lørenskog We have updated the stock with a few small sqm where Groruddalen represents the largest will revisit this theme next year when we have • Gardermoen / Kløfta 6 alterations compared to our 2016 report, also area in our respective definition of the areas. obtained more data concerning the areas. • Regnbuen / Ski including a few conversions and new developments, Although the area is still the largest in terms of • However, the total stock remains quite comparable sqm, there is little new development in the area The areas are volatile due to the relative small • Gjelleråsen year. The definition of “logistics buildings” is and a considerable amount of the stock is old and stock in the various areas and therefore a few • developments that are primarily planned and a portion of this is more or less dead stock. larger vacancies will have large implications on • Vinterbro zoned as “Warehouse/Storehouse and other types the vacancy rate for each area. Consequently, • Moss of storage space”. We have done every possible Vacancy we anticipate Groruddalen to be the most stable • measure to ensure that as much logistics property The vacancy rate is defined as “marketed logistics area due to is also being the area with by far the • Lier as possible has been counted and included in the space divided on the total logistics stock”. As largest amount of stock. However, in the past • Rud total stock. Developments that are currently under opposed to the office sector where vacant space year we have seen a significant decrease in the construction have been included. Planned projects is readily marketed, logistics space in Norway is vacancy rate in Groruddalen. Furthermore, we that has yet to commence construction has been not as widely advertised. Consequently, the actual observe that most tenants move quite freely from excluded from the stock and will be included at the vacancy might in some areas be higher to what one are to another. It is not comparable to the start of a new lease or as soon as a new tenant we are able to document in this report. office sector where tenants are much more loyal could theoretically accept tenancy and make us of to an office area due to a variety of reasons. In the property within the same day. The vacancy rate in the different areas differs the logistics sector, there are several areas in significantly from 0 % vacancy to other different locations that offer the same qualities The total stock of logistics property in the Greater areas with close to 25 %. The stock in certain and consequently, a tenant moves much more Oslo area is by our estimation close to 2.8 million areas is quite small and large vacancies in easily from one area to another. Colliers international Logistic Market report 2017

Description of the areas attractiveness in each sub area by prospective What these areas have in common is that that are tenants and investors. There are several factors preferably located in the vicinity of important points behind this assessment. Primary factors include; of communication. Throughout the Oslo area, the location, communication links, willingness main highways are the Europe road 18 (E18), by municipality to facilitate further Logistics Europe road 6 (E6) and Europe road 16 (E16). All development and land value. of the areas are either linked to one or more of these. Other important means of communication and transportation is the Oslo Airport located to the North of Oslo at Gardermoen, approximately 40 minutes from the city centre, as well as the ports in Moss and Drammen and to a decreasing extent, the Port of Oslo. Key figures

As we identified in last years report, some of our Prime Rent per defined logistics areas are located in urban areas Vacancy Rate Prime Yield 7 sqm (NOK) and are diminishing rather quickly in size. The Ski 8 % 5,20 % 1 200 area of Groruddalen remains the largest logistics Skedsmo 16 % 5,25 % 1 175 hub in terms of sqm, however, are continuously Gardermoen 2 % 5,35 % 1 100 diminishing in size due to annexations and Lier 12 % 6,10 % 950 conversions from logistics and industrial land to Drammen 7 % 5,75 % 1 000 more residential, retail and office focused use. Rud 6 % 5,75 % 1 150 One such development which we also noted Vestby 9 % 5,80 % 950 last year is the large scale development taking Groruddalen 9 % 5,00 % 1 250 place at Økern which is now well under way. Moss 23 % 6,50 % 800 On the other hand, we have several more rural Vinterbro 0 % 5,80 % 1 000 municipalities that are vying for more logistics development such as Vestby and Moss that have Lørenskog 4 % 5,25 % 1 150 compiled strategies in their respective municipal Gjelleråsen 0 % 5,60 % 1 000 plans in order to become increasingly attractive Total / Prime 8 % 5,00 % 1 250 for developers of logistics property.

Colliers Rating Our Colliers Rating is used by Colliers International to assess the perceived Colliers international Logistic Market report 2017

the demand for logistics developments will only caused by new contracts in new developments Logistics strengthen going forward. There has been several although we do not expect a general increase. rumours of various large online retailers possibly locating to Norway which would command The vacancy rate within the Logistics sector has vast demands for logistics space. We are fairly gone down compared to our 2016 report from 10 % confident we will see such moves from large to 8.12 % for the Greater Oslo region as a whole. international players in the not too distant future. The decrease is considerable, and is an even larger The Norwegian logistics market, especially in terms on decrease compared to 2015. The downwards trend the transaction side is currently on fire with a demand There is significant pressure especially on in the vacancy rate is found within many of the the yields within this segment. Previously, the sub-areas. In a couple of areas, Gjelleråsen and which significantly outperforms the current supply. logistics sector was often regarded as stable and Vinterbro, we were unable to find any existing stock The long leases and single tenant properties which are “without too drastic changes” with stable yields that is currently being marketed. Consequently, and rental prices. In the last few years, especially the vacancy within these two areas are currently rather frequent within this segment is highly popular the yield levels has changed quite drastically and 0 %. It is however important to note that there is amongst investors. decreased significantly. The current prime yield several prospective developments that are being estimation is 5 %. However, we do believe that actively marketed within several areas meaning that there is pressure on the yield to trend even further although the vacancy rates in most areas are quite 8 downwards, given the appropriate tenant with a low, there is potentially more square meters to let. long lease (12+ years). We find it probable that there will be conducted transactions within the Due to a high conversion rate of old logistics logistics sector with a 5 % prime yield during the property, the total stock of logistics property course of 2017. The prime yield of 5 marks a 50 % remains fairly stable. During the past couple decrease compared to our 2016 report where we of years, it has seen a small increase and our also forecasted a lower yield going forward. current estimation is that the total stock within our designated areas are approximately 2.8 million sqm. The rents on the other hand remains stable with Furthermore, the performance and risk within the fact, several of the transactions in the last few Groruddalen achieving the highest rents, similar The pool of logistics properties with vacancies Norwegian logistics sector have proven for years years has been residential developers which has to previous years. The prime rent remains around were gathered and counted during the two to be very favourable. Also, the emergence of the bought logistics developments with a few years NOK 1 250,- per sqm, the same as we reported in last weeks of August. As our previous survey last few years conversion rates of old industrial of cash flow left which has suited the developers 2016. When gathering market information for this were conducted in March of 2016. While every areas into new residential dwellings has given perfectly as they have in several cases received report, we fail to see strong evidence suggesting measure has been taken to counteract the issue, comfort to reduced risk, especially in areas closer income from the building while going through the that the rents for logistics buildings in the Greater there is a possibility that the survey could have to the city centre which we have now seen many planning and regulation processes. Oslo region has increased within the Greater Oslo been polluted by marketed vacancies where the exampels, Kværnerbyen, Hasle and Bjørvika to region and our estimate is that they are not going advert has not been renewed by the property’s name a few. This has functioned as a hedge for With the occurring emergence and increased to do so for the rest of 2017 in general. Some broker after the summer holidays, to a larger investors purchasing logistics developments. In presence of e-commerce, the perception is that submarkets might see some increased rents degree compared to late March. Colliers international Logistic Market report 2017

Transactions

Transaction volume for “Logistics property” (in NOK bn)

For quite some time there has been significant and 10 9

strong interest for logistics property in Norway. With 8 the current market valuing certain qualities in general, 7 6 several of these can be found within logistics property. 5 Especially enticing is the high frequency of long leases 4 3 a long with single tenant occupancy which is both 2 highly attractive to many investors. Furthermore, the 1 9 0 increasing land prices in the Greater Oslo region has 2012 2013 2014 2015 2016 2017 (e`) continued to serve as a hedge for many investors for Source: Colliers International several years. Share for “Logistics property” of total transaction volume

%

20

18

16

Admittedly, the latter is currently somewhat more One other factor which is becoming more 14

uncertain going forward compared to recent years apparent is the forecasted increase in demand 12

passed, mainly due to the receding housing market, of logistics space as opposed to both retail and 10

which if continues, will have a negative impact on office. While more and more people are working 8

land prices. Lower conversion rates from industrial and doing their shopping from home, the demand 6

to residential use are also expected going forward. for warehouses and logistics is only increasing. 4

However, these last factors will not greatly subdue Previously, and also for the time being, the yield 2

to demand that we currently see for the logistics premium has been significant in the logistics 0 sector – there is too many other favourable factors sector compared to both the retail and office 2012 2013 2014 2015 2016 2017 (e`) which remains in play. sector. While a premium should remain due to Source: Colliers International Colliers international Logistic Market report 2017

low building costs and comparatively lower costs as part of logistics property, the figure is even and specific demands for type of location, we more lopsided. Including industrial property, do expect that the premium will increase going the transaction volume was close to NOK 15 bn, forward due to the sheer amount of demand considerably more compared to the year before. that there will be for logistics property. We have already seen a significant yield compression For logistics buildings alone the share of the within this sector in the last couple of years. total transaction volume in 2016 was 10 % at slightly more than NOK 7 bn which is considerably The yield levels for logistics property has higher compared to 2015. This is based on 28 10 decreased quite heavily during the past couple transactions which is an increase of close to 50 % of years, alongside the yield levels for other real compared to 2015 underlining that the interest for estate asset classes. The prime yield level in logistics property in Norway is indeed very high. the Greater Oslo region is now 5 %. Amongst Add to this a considerable volume in industrial prospective investors, prime logistics property is property as well. There are a few possibilities viewed as attractive due to the high frequency of for larger logistics transactions which might single tenants on long leases which is generally materialize during 2017 and we expect that the more often compared to other asset classes with sector will at least maintain a similar market share 10 – 15 years of duration not being extraordinary. of the total transaction volume. So far this year Also, seen in a historical perspective, logistics we have counted a total transaction volume of plots has in and around the Oslo area has proved approximately NOK 5 bn based on 19 transactions to be highly valuable due to the high degree of (all portfolio deals counted as one). We expect this residential conversions that has taken place. The to increase quite significantly during the rest of the trend of logistics areas being moved further away year. The share of the total transaction volume is in from the city centre continues. The transaction line with the previous year of about 10 %. volume within the logistics sector was up quite substantially in 2016 compared to 2015 in The transaction volume based on the past five especially when considering the share of the years suggest a significant increase for the total volume. If we include industrial property logistics sector since 2014. Outside of 2015, Colliers international Logistic Market report 2017

which was an incredible year for the commercial property as a whole, this is also correct while looking at the share of total transaction by the logistics sector.

What we also are seeing which is becoming increasingly relevant is the yield-levels in the various sub areas are becoming more and more levelled. What this means is that investors as a 11 whole are less inclined to pay a premium price for one area compared to another. In for instance the office or especially in high street retail, location is essential. While location is also important within the logistics sector, we are seeing more and more that as long as you are within a roughly 45 minutes drive from Oslo, location is not “that” important. In the logistics sector, as long as you have a solid contract with a tenant with a strong covenant, the location is not as important as long as it is within a certain radius. This means that a 15 year lease with a single tenant in Skedsmo is unlikely to attract the same yield premium compared to for instance Lier as it would a few years ago. Differences remains, and will naturally do so as well going forward, however, they are indeed getting minimized. Colliers international Logistic Market report 2017

Groruddalen

The largest submarket within the Greater Oslo the municipality boarders which will continue to logistics market remains Groruddalen by a large drive this trend, regardless of residential prices. % 1300 9,0 margin. The area, which has historically been YRentield the most important and prominent logistics area The overall attractiveness of Groruddalen as a 1200 8,5

in Norway and especially in the Oslo region, logtistics hub is clearly reflected in the rental 1100 8,0 obtains it stature as arguably the most desired prices within this area with normal good quality 1000 7,5 destination for prospective tenants. Groruddalen buildings let at +/- 1000,- per sqm. Prime 900 7,0 remains the area with the highest rents. However, properties may obtain rents as high as NOK Groruddalens position as the desired locations for 1250,- per sqm for storage / warehouses and 800 6,5 most players within this market is diminishing. somewhat higher for office space in combination 700 6,0

As land values has increased, less and less new buildings. Unsurprisingly, this makes Groruddalen 600 5,5 development is taking place in this area and the most expensive logistics area in Norway. 12 500 5,0 consequentially, the high rents has lately had 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 to do with location, more so than standard and The yield level in this area for logistics property Rent Yield quality, and much of the stock is of older quality has continued to decrease. We have revised with lower loading capacity, terminals and ceiling our current yield projection from 5,5 % in our heights. report from early 2016 to 5 % currently. The consistency in the yield drop through out the

Over the past few years there has been a high different sub areas are quite apparent. Prime rent (nok/sqm.) 1 250 rate of conversion of old industrial and logistics space into mainly residential developments as The vacancy rate in Groruddalen has dropped Vacancy rate (%) 9 well as new offices and retail units. Following as well. At present, we find the vacancy level the skyrocketing residential prices, Groruddalen to be 9 %, compared to the previous vacancy Prime yield (%) 5, 00 has been of the areas in Oslo with the sharpest rate of 13 %, a drop of over 4 percentage points increase in residential prices, more and more which is quite considerable for such a large Colliers rating A obsolete and old logistics stock is being removed area as Groruddalen. This reduction in vacancy in order to facilitate residential development. is contributing considerably to the overall drop We do expect this trend to continue, albeit at in the overall vacancy rate as well. The largest a slightly slower pace in 2017 and 2018 as reason behind the reduction in vacancy is fewer residential prices are beginning to stabilize. The properties available to let, with 40 in early 2016 municipality highly favours alternative use within compared to only 29 in late August of 2017. Colliers international Logistic Market report 2017

Ski

The two primary logistics hubs in the municipality as they have steadily increased during the past of Ski, is Regnbuen in the north end and Ski in decade. In recent years, we have also seen a % 1300 9,0 the southern end. After years of development, significant drop in the yield levels in the area, a YRentield Regnbuen now appear as one of the preeminent development that has continued since last year. 1200 8,5

and sought after logistic areas within the Greater With a prime yield of only 5,2 %, it is apparent 1100 8,0 Oslo for both tenants as well as potential that the municipality of Ski, and especially some 1000 7,5 developers. A substantial part of the stock is of of the sub areas within this area, is amongst 900 7,0 good quality and newer standard, and the whole the most popular logistics areas in Norway. The area has been adapted to best cater the needs drop in the yield is significant with our previous 800 6,5 of modern day logistics hubs. Present in this estimate as high as 5,6 % close to a year and a 700 6,0

area is several prominent tenants as well as half ago. 600 5,5 landowners. Yet, there is still substantial amount 13 500 5,0 of land available or expected to be available in the The vacancy rate however remains stable at 8 % 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 future within the area. The area remains highly currently compared to 9 % in 2016. Compared to Rent Yield popular, especially amongst developers looking an area such as Groruddalen, there are a scarcity for large scale developments due to its’ location of available existing buildings to let within Ski. and possibilities. Several of these land plots are However, possibilities for new developments does shovel ready and are waiting for anchor tenants exist. in order to begin construction. The municipality Prime rent (nok/sqm.) 1 250 in general is still strongly supporting further logistics development in the area and the stock Vacancy rate (%) 8 has increased at Regnbuen for the 2nd straight year compared to our 2015 and 2016 reports. Prime yield (%) 5, 2

The logistics areas present in Ski has excellent Colliers rating A communication links, easy access points and adjacent location to Oslo which all makes these areas a well sought after destination for developers and tenants in the logistics industry. The area’s general popularity can be seen in the historical development of the obtained rents Colliers international Logistic Market report 2017

Rud

Rud as an area has a mix of smaller and a few considerable and undergoing roadworks which larger logistics developments which comprise is highly positive for Rud as a logistics hub. The % 1300 9,0 the area. In terms of total stock, Rud is one of easy access and proximity to Oslo are some YRentield the smaller hubs within the Greater Oslo region. of the popular traits of Rud as a logistics hub. 1200 8,5

However, due to its’ location, the area has been One drawback however, is that this particular 1100 8,0 one of the more expensive logistics areas for section of the road is known to cause heavy 1000 7,5 many years. The area also consists of quite a few traffic congestions. The adjacent location to Oslo 900 7,0 retailers, mainly furniture and car dealerships nonetheless makes this area one of the more and also has several residential neighbourhoods expensive logistics areas in the Oslo region with 800 6,5 in close proximity. The logistics developments at sharp, but stable rents and acuminating yields. 700 6,0

Rud is found in the north west in the municipality The current yield level at Rud is estimated to 600 5,5 of Bærum. The municipality is home to some of 5,75 % which is a considerable decrease from 14 500 5,0 the highest residential prices in the country and 6,5 % from around 18 months ago. 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 is otherwise generally more known for its’ office Rent Yield markets, especially in areas such as Fornebu / The vacancy rate however has also decreased and . and is currently 6 % in this area compared to 12 % from 2016. Such factors are putting pressure on the logistics market in Bærum as land prices are amongst Prime rent (nok/sqm.) 1 150 the highest in Norway which makes logistics developments in this area expensive. The Vacancy rate (%) 6 municipality remains reluctant towards expanding

the existing stock of industrial and logistics Prime yield (%) 5, 75 buildings in order to preserve the municipality’s status as an “affluent community”. This stance is Colliers rating B highly unlikely to change. Going forward, certain logistics developments at Rud might become under pressure for redevelopment.

Rud is located only 20km from Oslo by the main . The adjacent E16 is currently seeing Colliers international Logistic Market report 2017

Lier

The logistics area in Lier is located contiguous to and potential for larger development schemes. the Drammen area and while many will regard There are several possible developments at Lier % 1300 9,0 the two as a cohesive area, we have opted to which is zoned and regulated for the purpose. We YRentield define these as separate areas for the purpose find it probable that Lier as a logistics area will 1200 8,5

of this report. The logistics developments of become more vital going forward. 1100 8,0 Lier are primarily located at Lierstranda next 1000 7,5 to the port of Drammen. The municipality of All our measured variables, vacancy rate, yield 900 7,0 Lier has strong traditions of being one of the and rents indicates that Lier has become a more foremost agriculture municipalities in Norway, attractive area during the past 18 months. The 800 6,5

consequently there is considerable amount of vacancy rate has fallen from a staggering 30 %, 700 6,0

land within the municipality boarders which could down to 12 %. The yield has decreased to 6,1 % 600 5,5 have the potential for logistics development. compared to 6,7 % in 2016. Lastly, the prime rent 15 500 5,0 With its’ relative proximity to oslo, good is now NOK 950 per sqm, up from 800 in our 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 communication links along the E18 main highway previous report. Rent Yield and the municipality’s ambition to attract logistics development. There is a lot of land which would be well suited for storage buildings. Lier has the potential to become an increasingly important logistics hub going forward. Prime rent (nok/sqm.) 950

The area of Lier draws quite heavily on it’ Vacancy rate (%) 12 adjacent location to Drammen as well as its good

communication links towards Oslo. Currently, Prime yield (%) 6,1 Drammen stands out as the more popular destination although it is slightly farther away Colliers rating C from Oslo and has more traffic. The road works regarding the E18 to the west of Lier is complete. With similar possible developments in the more vital eastern section expected through “Oslo Pakke 3” in the coming years, Lier could become more of a prime area given the availability of land Colliers international Logistic Market report 2017

Drammen

Drammen was previously known as «Norway’s The rent for logistics developments has increased largest junction». However, since the turn of rather significantly since the mid 2000s. The % 1300 9,0 the millennia, the city and surrounding area has rents has however, remained fairly stable in the YRentield undergone rapid urban development and has past few years. Our estimate for prime rent in 1200 8,5

been significantly altered and redevelopment. Drammen has however increased somewhat 1100 8,0

Today, Drammen has become a vibrant city with and is currently estimated at NOK 900,- per 1000 7,5 one of the highest and fastest growing residential sqm. Although the rents has not changed much 900 7,0 prices in Norway as well as it has become an in the last few years in Drammen, our outlook attractive location for many businesses. Several for the area remains a very positive one and we 800 6,5 logistics areas does however remain within and do believe that the area will continue to develop 700 6,0

close to the city with the main hubs located to strongly and favourably for the logistics sector. 600 5,5 the east and west of the city centre. In the south 16 500 5,0 east we find the dock area and further to the east During the past year, the vacancy rate has the 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 there is logistics development as well towards vacancy rate has remained the same at 7 %. Rent Yield the neighbouring municipality Lier. In the west There are several properties with vacancies in we find the logistics development towards Nedre the area, however, they are all quite small with no along the river Drammenselva. vacancies with more than 5000 sqm available. The prime yield level in Drammen has however The Port of Drammen is one of the largest and decreased strongly from 6.3 % to 5,75 % during Prime rent (nok/sqm.) 1 000 most important in Norway, often regarded as the the past 18 months. main automobile port in . There Vacancy rate (%) 7 is ongoing discussions surrounding the area and the possibility to transform the dock areas into other purposes than storage facilities and Prime yield (%) 5, 75 with the minimization of the dock of Oslo, the Colliers rating B dock of Drammen has increased its’ importance during the span of the past 15 years. In general, the municipality of Drammen remains eager to maintain and strengthen its’ position as one of the most important logistics hubs in the Greater Oslo region. Colliers international Logistic Market report 2017

Lørenskog

Located by the E6, only 15 km from the Oslo city Lørenskog are one of the more expensive centre, Lørenskog is among the most popular logistics areas in terms of prime rent, primarily % 1300 9,0 logistics areas in the Greater Oslo region, a large due to its’ location as well as certain high quality YRentield part due to its excellent location close to Oslo properties within the areas. The prime rent has 1200 8,5

and with access to good communication links to increased slightly and is currently at NOK 1 100,- 1100 8,0

the Greater Oslo region as a whole. There are a per sqm which a minor increase compared to 1000 7,5 few good quality properties in the area with some last year. Concerning the yield level however, we 900 7,0 very large developments such as Postens’s main have seen a considerable decrease from 5,8 % logistics distribution centre of roughly 80 000 to 5.25 % in this area as well, as we have seen 800 6,5 sqm. Most of the developments is based around been the case in most of our sub areas. At the 700 6,0

Røykåsen, Solheimsveien and Skårersletta. same time, the vacancy rate has plummeted 600 5,5 According to the municipality plan, Lørenskog compared with 2016. In last years’ report, the 17 500 5,0 remains focused on facilitating logistics and vacancy rate was 13 %, mainly due to a few 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 industrial development, although there is limited larger vacancies Today, the vacancy rate is as low Rent Yield supply of land available for further development of as 4 % where the largest vacancy is 5 000 sqm. this nature. As a consequence of to the ongoing It is important to keep in mind that the vacancy urbanization of the area, residential developments rate in an area such as Lørenskog only needs a are becoming increasingly attractive and have few larger developments either being released thus led to higher land prices. This is making it on to the market or let to alter the vacancy rate Prime rent (nok/sqm.) 1 150 more difficult to build new logistics developments significantly. This is however a rather common as well as preserve old developments as they theme amongst the various sub areas in the Vacancy rate (%) 4 are increasingly under pressure to be converted Greater Oslo region. in to alternative use which makes it increasingly Prime yield (%) 5,25 difficult to make new logistics developments in

this area liable. We believe that the population Colliers rating B growth and continued urbanization will cause an upsurge in developments of obsolete logistics buildings in favour of residential and even office developments in Lørenskog. Colliers international Logistic Market report 2017

Skedsmo

There are several logistics areas in the hub during the past year. The prime yield as well known as Skedsmo, yet the principal area is has dropped significantly and is now 5,25 % % 1300 9,0 Berger which is one of the premier logistics in compared to 5.7 % in our estimate from 2016. YRentield the Greater Oslo region. Two other important The vacancy rate within Skedsmo has however 1200 8,5

areas in Skedsmo are to the west and increased quite considerably. From 11 % to 16 1100 8,0 Lillestrøm to the east. Berger is located north in %. There are several larger vacancies within this 1000 7,5 the municipality. At Berger, there are some still a area and 3 properties with more than 7 500 sqm 900 7,0 few larger plots available for developers who are vacant. Furthermore, at Berger especially, there seeking tenants within the logistics sector. Land are still good development potential for prime 800 6,5 prices are however increasing quite considerably property, also with several recent completions. 700 6,0

within this area. The industrial sector has 600 5,5 been the predominant source of labour within 18 500 5,0 the municipality, although the prevailing trend 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 indicates that a diminishing share of jobs relate Rent Yield to the industry and logistics sector. The current strategy in the municipality plan states that the focus ahead lies in developing more office related businesses rather than logistics related industries. Prime rent (nok/sqm.) 1 000 Skedsmo is viewed as one of the prime logistics areas in Norway and Berger especially is worthy Vacancy rate (%) 16 of a top rating. The communication links to Oslo and surrounding areas makes it highly attractive Prime yield (%) 5,25 to most prospective tenants. Colliers rating A Recent lettings for new development at Berger indicate that the rent levels have increased in the space of the last few years. We have seen recent examples of properties being let close to NOK 1200,- per sqm for logistics space. In any event, the rents have increased with roughly 5 % Colliers international Logistic Market report 2017

Gjelleråsen

Gjelleråsen is located to the north east of Oslo no actively advertised logistics properties within in the municipality of and the area in this area. There are however, development % 1300 9,0 general consists of modern developments with potential and possibilities for prospective tenants YRentield some large high quality buildings. It is a rural to locate here. 1200 8,5

district without a natural population centre, 1100 8,0 although serves as the municipality centre 1000 7,5 with a railwat station and town hall. According 900 7,0 to the municipality plan, Nittedal has an ambition to prioritize logistics development in the area. In 800 6,5

our opinion Gjelleråsen has plenty of potential to 700 6,0

become an even more acknowledged logistics 600 5,5 hub. The municipality has a rather large land bank 19 500 5,0 as well, such that future logistics developments 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 could be easily facilitated. The communication Rent Yield links has also become quite good in the area in recent years.

The current prime rent ~ NOK 1 000,- per sqm, a slight increase from last year. Gjelleråsen Prime rent (nok/sqm.) 1 000 has the potential to become one of the premier logistics hubs going forward, especially in the Vacancy rate (%) 0 area around Brenneriveien and we reckon there is considerable upside potential in both rents Prime yield (%) 5,60 and yields in this area. There is however, work

to be done in the Skytta area which is generally Colliers rating B of a lesser standard. The yield level has dropped significantly at Gjelleråsen as well with currently 5,60 % as our current estimate. The vacancy rate is 0% which means that this area has seen a decrease in the vacancy rate of 6 percentage points and at the end of August 2017, there was Colliers international Logistic Market report 2017

Gardermoen and Kløfta

To the south of Oslo Airport lies Gardermoen our last report. Gardermoen as a logistics hub Business Park where the majority of the is becoming more and more desirable amongst % 1300 9,0 Gardermoen areas’ logstics developments are both tenants and landlords. The prime yield also YRentield located. There are some developments further reflects this with a highly significant drop of 1200 8,5

south at Kløfta as well as in which 0,65 % percentage points to 5.35 % from 6 % 1100 8,0 draws upon Gardermoen as a logistics hub. previously. 1000 7,5 The existing stock primarily consist of recent 900 7,0 developments of high quality and the area In due part that most of the logistics properties is expected to increase in size as there are are of recent development with leases that has 800 6,5

significant amounts of land available in this yet to expire, the vacancy rate is notably low at 700 6,0 district, probably more than in any of the other only 2 % which is a decrease of 1 % since last 600 5,5 areas in the Greater Oslo region. As one of the year. With the rapidly growing municipality and 20 500 5,0 fastest growing municipalities in Norway in terms its focus on stimulating further developments 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 of population, Ullensaker is popular for its easy of commercial real estate, especially within Rent Yield commute to Oslo in addition to the prosperous the logistics sector, we find it probable that job market that was created postliminary the Gardermoen will steadily continue to develop opening of the OSL Airport some 20 years ago. into an even more significant logistics hub in the municipality plan states that one of the main the future. objectives of the local government is to facilitate Prime rent (nok/sqm.) 1 100 and arrange for commercial land, including logistics. Vacancy rate (%) 2

As the area forge ahead, we expect that the prime Prime yield (%) 5,35 rent and yield will follow suit. The area is popular amongst developers as well as tenants and given its good qualities we find it reasonable to believe Colliers rating B that its popularity will increase in the years to come.

The current prime rent is NOK 1 100 per sqm which is a considerable increase compared to Colliers international Logistic Market report 2017

Vestby

Vestby is strategically located between the two The vacancy rate in Vestby has increased from main highways, making it an ideal location for around 7 % by 2 percentage points and is now at % 1300 9,0 logistic properties. The logistics hubs in Vestby 9 %. The area is generally dominated by larger YiRenteld are concentrated in the south of the municipality tenants on long leases and we expect that a few 1200 8,5

centre in areas such as Deliveien and Delitoppen. of the current vacancies is likely to be sorted 1100 8,0 A great deal of the space have been developed rather quickly. 1000 7,5 rather recently and consequently the majority of 900 7,0 the developments are of high quality. Vestby has Given the municipality´s favorable attitude already established itself as a significant logistics towards logistic developments and the overall 800 6,5 haven and both developers and tenants are able attractiveness of the area, we believe that Vestby 700 6,0

to find large parcels of available land in this area. will attract new tenants from areas such as 600 5,5 The municipality is favorable towards further Groruddalen and that the area will continue to 21 500 5,0 development of the logistics sector as well. grow as a logistics hub. 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Rent Yield The prime rent in Vestby has increased at a solid rate for the past few years and is currently around NOK 950 per sqm, which is in excess of 10 % more compared to last year. In spite of Vestby being a popular logistics destination, Prime rent (nok/sqm.) 1 000 rents remain slightly lower than that of many comparable areas, largely due to its distance from Vacancy rate (%) 0 Oslo. As we also noted a year ago, it is likely that the rents will continue to increase within this Prime yield (%) 5,60 area. Vestby is becoming an increasingly popular logistics destination for both landslords as well as Colliers rating B tenants.

The prime yield had contracted quite considerably in Vestby as well. Our newest prime yield estimate for this area is now 5.8 % compared to 6,5 % from 18 months ago. Colliers international Logistic Market report 2017

Moss

There are three principial logistic hubs in Moss; few years and is currently at NOK 800 per sqm The dock area, Årvollskogen and Solgaard Skog while the prime yield at present is 6,5 %, also a % 1200 9,0 located to the west, south east and north east considerable decrease compared to 7 % in our YRentield respectively. Since the 19th century industry 2016 estimation. 1100 8,5

has played a vital role in the development 1000 8,0 of Moss with its port becoming increasingly The vacancy rate at Moss has gone down 900 7,5 important as the port of Oslo is downplaying from 37 % to 23 % after several of last years 800 7,0 its role as a national logsistics hub. The port of vacancies has been filled. The port of Moss will Moss is of considerable size and cater to both continue to play a crucial role as Moss continues 700 6,5 commercial and public transport as well as the to position themselves as an important logistics 600 6,0

adjacent Airport. With its proximity to the hub in the future. 500 5,5 main highway E6 and its sizeable port, Moss 22 400 5,0 is a natural region for logistic developments. 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 According to the municipality plan, Moss will Rent Yield prioritize further development of the logistics sector in the region. The existing stock consists of both older and newer developments of varying quality. Based on the good connectivity with E6 and E18 along with its easy access to both Prime rent (nok/sqm.) 800 the sea- and airport, we believe Moss´ role as a logistic hub will become increasingly important in Vacancy rate (%) 23 the years to come. Prime yield (%) 6,50 Moss as a logistics area is gaining traction amongst both landlords and tenants alike. The Colliers rating C city remains one of the cheaper logistics hubs in the Greater Oslo region and the growth potential in the rents in Moss are certainly present, and we also believe we are going to see a steady increase going forward. The prime rent has already increased somewhat during the last Colliers international Logistic Market report 2017

Vinterbro

Vinterbro is located in the municipality of Ås just of 6.2 % means that the yield level in the area south of Oslo and is characterized for its’ rural has been quite stable since last year. The prime % 1300 9,0 landscape with large land reserves. The logistics rent in the area is NOK 950,- per sqm, a slight YiRenteld area at Vinterbro is one of the smaller ones in increase from last year. 1200 8,5

terms of stock in the Greater Oslo region and is 1100 8,0 concentrated alongside the European route E18. 1000 7,5 The area is however rapidly increasing in volume 900 7,0 as a logistics hub and is highly interest area going forward with its location in relation to Oslo. The 800 6,5

logistic properties in the area has mostly been 700 6,0

developed in recent years and have thus generally 600 5,5 a standard of high quality with good ceiling 23 500 5,0 heights and plenty of loading capacity. There 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 remains considerable amount of land available Rent Yield for further development at Vinterbro, and we do anticipate that this will continue to materialize in the near future. The municipality plan states that Ås is positive towards further logistics development, although it also communicates that Prime rent (nok/sqm.) 1 000 it is paramount to conserve existing arable land at the same time. Vacancy rate (%) 0

At the area of Vinterbro, we were actually unable Prime yield (%) 5,80 to find any vacancies at present and the vacancy

rate is 0 % accordingly. This was also the case Colliers rating B in our 2016 report. One factor is that most of the developments are of newer build and contracts have generally yet to expire. This excludes prospective new developments that will be located in the area which however is not vacant either now or within the year. The yield level Colliers international Logistic Market report 2017

Development potential

Norway

The Development potential in the Greater Oslo region 600000 540000 remains high. The main reasoning for this is that 480000 several municipalities remains positive and is gearing 420000 360000 towards further industrial and logistics development 300000 in order to obtain businesses and activity within their 240000 180000 communities. 120000 60000 24 0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Initial logistics buildings Copleteted logistics buildings

Oslo

200000

180000

160000 Furthermore, several of the main roads in to Oslo several previous logistics hubs and the docking 140000 are passing through relatively rural areas with a in Oslo which is being continuously 120000 land of available land for development. If one is marginalized. In addition to residential use, we 100000 to drive 30 minutes to the East, North or South also see large scale developments of old logistics 80000 of Oslo, chances are you are passing through a buildings being transformed into offices and retail 60000 fair chunk of undeveloped land in a municipality use. 40000 favourable towards logistics and industrial 20000 development. The ongoing trend of logistics Areas such as Aker Brygge, and more recently 0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 hubs being located somewhat farther from the Bjørvika, Sørenga and Tjuvholmen were city centre is continuing with the development of previously key logistics and industrial areas which Initial logistics buildings Copleteted logistics buildings Colliers international Logistic Market report 2017

have been developed into vibrant and hugely Further issues is that outside of the main popular downtown areas of the Oslo City centre. highways such as the E6 and E18 in the Similar developments are currently taking place in Oslo region, the challenging topography and areas such as Storo / Nydalen, Hasle / Økern and communications infrastructure in Norway is Ensjø. more challenging compared to most countries in Europe which makes it vital that main logistics 20 years ago, most of the logistics development hubs are located close to such main highways. in the Greater Oslo area was located in and Furthermore, the railway situation in Norway around Groruddalen outside of the city centre. not adequate for rail to be a highly viable source While the area remains the largest logisticis hub of effective transportation of logistics goods. in terms of stock and arguably importance, new When trains crosses the Norwegian boarder from developments are mainly taking place elsewhere , they need to decrease their velocity. as residential and also office prices and The amount of transportation of goods by road attractiveness has soared in Groruddalen. This is higher in Norway compared to most other has caused an influx of new logistics property, European countries. In general, the railway mainly in the county of in the North, systems that exists in the Greater Oslo area are East and South of the Oslo City Centre, as well located close to the main highways. 25 as in areas such as in and around Moss in the County of Østfold and in Lier and Drammen in In several of the main logistics hubs such as County. The ports of Drammen and Drammen, Vestby, Gardermoen and Gjelleråsen Moss are also seeing increased traffic due to there is still an abundance of land available with a the lesser importance of the port of Oslo as a lot of development potential. logistics hub. Although residential prices in the area has In general, Norway has a very scattered been increasing quite rapidly along with strong population and there usually is no scarcity of land population growth during the past couple of outside of the inner city of the larger metropolitan years, the prices in these areas are nowhere near areas. Consequently, our belief remains that the central parts of Oslo at the moment, although the history of moving less capital intensive they have admittedly increased significantly in industries such as the logistics sector and recent years. The residential prices are however, industry further away from the city centre will currently dropping in most areas after several continue going forward. As land prices increases years of strong price growth. It is also worth also in nearby areas, such as the fastest growing mentioning that the population growth has been county in Norway, Akershus, it will become more significantly subdued in the last few years, and challenging for logistics development in these especially in 2017. This makes the outlook for areas as well. land- and residential prices more uncertain going Colliers international Logistic Market report 2017

forward. Consequently, we will also likely see However, this was preceded by the lowest rate in less conversions of old and obsolete logistics the last 10 years along with 2009, and as such, buildings. it is difficult to sate a certain trend concerning the development rate of logistics buildings in the In sum there are several of the newer logistics Greater Oslo region. What we do know is that the hubs with the potential to grow significantly and average rate of initiated logistics developments our belief remains that much of the new demand is close to 100 000 sqm per annum while for logistics developments will be located in areas the completion rate is 80 000 sqm. As there such as Vinterbro, Gardermoen, Vestby and Lier. is considerable amounts of available land for The logistics stock in areas such as Groruddalen logistics development in several of the more and Rud will continue to decrease relative to popular areas, we believe that the yearly supply the total stock. The big differences between will continue to hinge on signed contracts and residential and office prices compared to logistics, “tenant activity” and thus alter considerably year will continue to act as a “hedge” for investors after year. looking for opportunities within the logistics sector. While the residential market is cooling down, we are bracing ourselves for the office 26 market to “explode”, both in terms of rents and in terms of new development which has been very stagnant for this sector for a few years.

For Norway as a whole, the initiating and completion of logistics buildings are fairly stable, altering slightly from year to year.

The supply rate in Oslo varies considerably from year to year, as one would expect. The stock of logistics buildings is smaller compared to the office stock and will therefore differ even more from year to year. It is difficult to find a certain trend within the supply of logistics buildings. Speculative development is close to non-existent and the stock varies largely on signed new leases for new buildings. 2016 did however treat us to the 2nd highest rate of initiated industrial buildings during the span of the last ten years. Colliers international Logistic Market report 2017

of these as part of its “burn less and burn clean” Due to overcapacity, a company such as Key takeaways from programme. Maersk are planning to diversify away from container shopping toward logistics and inland the continent What we also see is that the supply chain within transportation, where it sees long term potential. the logistics sector is evolving and reshaping. Amazon’s push into the logistics and shopping There are also changes happening within freight sector is the latest in a turn of events disrupting forwarders which is the middle men of the supply In Norway, most of the freight is road based, especially traditional supply chain operaters. Other cyclical chain which job is to organize shipments for inland. Admittedly, various ports across the country and structural factors are at play, such as the clients using their own network or third-party crisis in the container shipping industry and providers. Some of the big names in the industry also has their fair share of freight, which in turn is sent greater use of technology in manufacturing, retail includes DHL, Kuehne & Nagel and DB Schenker. elsewhere in the country almost exclusively by road. and logistics industries. At present, the total This market segment is under severe competive value of the global logistics and transportation pressure for two main reasons: industry is believed to be worth approximately $1 trillion. If e-commerce keeps growing the current • The impact of technology, making middleman rate, it could reach $5.4 trillion globally by 2020, redundant by matching supply and demand in However, it is apparent that the major shift in products. French supermarket chain, Monoprix, more than the UK and ’s GDP combined. real time 27 Europe is that more and more freight is handled for example, moves 55 % and 35 % of its imports There are obvious positive growth impacts for • The challenges posed by a new breed of by rail and water-borne transport as opposed from ports to its warehouses by water and rail the logistics industry as a result of the growth in competitors, including e-commerce companies, to conventional road. In this era of strong respectively. e-commerce, and e-retailing in particular. In turn, but also logistics start-ups. environmental focus, this is an ongoing focus this is driving the logistics real estate market, • Thus far, it seems that many of the large which is only increasing in strength. One of the The rail capacity in Norway is poor and we are creating an ever growing need for warehousing players are leaning towards partnerships objectives set out by the EU in its Transport 2050 currently one of the countries in Europe with space / logistics services for the increasing and collaborations in order to face the new Roadmap is for 30 % of road freight traffic on the use of road based freight. Very little freight number of parcels. challenges and to digitalize processes to make distances over 300 km to be shifted to rail or takes place on rail. Furthermore, most of the them more efficient and apparent. water-borne transport by 2030, increasing to major logistics hubs in the Greater Oslo region Global e-commerce players, such as Amazon and 50 % by 2050. Over these distances, rail freight does not have easy access to rail nor sea borne Alibaba, are increasingly involved in the logistics is understood to be both a cost and emissions- transportation. This is something to keep in mind side of their business. They have invested The global logistics market is ever changing, and effective alternative to road-borne traffic. In while considering the logistics hubs and is an extensively in logistics to drive their business; this rapidly so after the emergence and increased Europe, due to the nature of their shipments issue which will increase going forward. It is is likely to continue going forward with more and importance of e-commerce. By 2020, 45 % of (heavy/bulky products( construction and also worthwhile to note that while there is an more businesses following their example. online shoppers are expected to buy goods from materials companies and the automotive sector ever increasing awareness of rail and waterway other countries. This would represent a four-fold are traditionally some of the most intensive users transportation, shippers continue to upgrade their Also, we are seeing mergers and acquisitions increase in the value of cross-border sales since of rail. However, we are seeing more retailers, road fleets by switching to more fuel-efficient as well as alliance-making within several 2014. This is new demand, in part, and will feed such as supermarkets, are now increasingly vehicles, including aerodynamic “teardrop” container shipping companies in order to survive into demand for logistics capacity / space along embracing multimodal logistics for some of their trailers. DHL for instance plans to deploy more in a market with significant overcapacity. the main trade routes. Colliers international Logistic Market report 2017

Forecast

The logistics sector has performed well for a prolonged period. During the last few years, the yields has fallen drastically while the rents has retained more or less a status quo.

Unlike for the office sector where we expect The attractiveness of the sector will continue 28 significantly higher rents going forward, we with the expected increase from an already high continue to believe in stable rents for the logistics demand from tenants, long leases and frequency sector going forward. These sectors has an of single tenancy. Consequently, we believe in issue in common which is that a lot of obsolete high transfer volumes within this sector going old stock has been converted into alternative forward in 2018 as well in addition to an even use in the last few years. However, unlike the higher share of the total volume. office sector, the logistics sector maintains an abundance of possible land in which to provide For the remainder of this year and onto the new developments for prospective tenants, unlike next, the differences and the premiums paid in the office sector where specific locations remains both rents and transaction prices for the various more important. logistics locations will remain historically small. The strength of covenant and length of lease We anticipate that the yield level is at or very along with quality of the property, will be the close to bottoming out with a current prime most important factors for investors, as long as yield of 5 %. Only a few years ago, a logistics the location is within a “certain” radius. development with sub 5 % yield was unheard of. While it is not currently out of the question, a strong barrier has to be breached which we see as unlikely during the course of next year. Colliers international Logistic Market report 2017

Karihaugveien 100 Leased out 14.300 sqm

29 Colliers international Logistic Market report 2017

Luhrtoppen 2 Leased out 6.900 sqm

30 colliers.no

Copyright © 2016 Colliers International. The information contained herein has been obtained from sources deemed reliable. While every reasonable effort has been made to ensure its accuracy, we cannot guarantee it. No responsibility is assumed for any inaccuracies. Readers are encouraged to consult their professional advisors prior to acting on any of the material contained in this report.